The Carlyle Group and APA weighing up Santos’ WA and Alaskan interests

It’s unclear whether ConocoPhillips would be prepared to enter into a deal with Santos.

Two US-based suitors are understood to be sizing up Santos assets, with The Carlyle Group thought to be interested in its Western Australia portfolio and Apache Corp (now known as APA) weighing a purchase of its Alaskan interests.

It comes after APA entered into a farm-down lease agreement on assets in Alaska with the APA last year.

DataRoom reported this month that two high-profile oil and gas investors were understood to be in the data room considering the purchase of a 10 per cent stake in the Pikka project in Alaska, jointly owned by Santos and Repsol.

It is understood APA had been assessing an acquisition a few months ago, although it remains unclear if it is still around the hoop and it is one of the two parties in the data room.

Sources say few energy operators have a mandate to carry out projects in Alaska for environmental reasons or they do not have the operational expertise.

Experts believe a deal makes most sense for ConocoPhillips because it has the infrastructure there to extract the most value.

However, it’s unclear whether ConocoPhillips would be prepared to enter into a deal with Santos after tensions emerged over Santo’s Barossa acquisition north of Australia from ConocoPhillips.

Santos renegotiated a contingent payment up to $US200m that was to be made when the project reached final investment decision and the upfront purchase payment was reduced.

Santos had hired Moelis to work on the Alaska sale at least 18 months ago after inheriting the asset in a $21bn merger with Oil Search in 2021.

It owns a 51 per cent interest in Pikka and Repsol owns the remainder, and both owners had earlier been hoping to reduce their interests by about 15 per cent.

The project was earlier estimated to be worth between $US1.5bn and $US2bn, but now may be worth far more on the back of the rising oil price – as much as $US3bn.

Santos and Repsol are half way through the construction of the Pikka project that is due to be finalised in 2026, and should it sell the asset now, it would be at a discount to what it would be worth once finished.

Meanwhile, after missing out on Woodside Energy’s Macedon and Pyrenees assets when withdrawn from the market, it is understood Carlyle may now be holding talks about buying domestic gas assets from Santos in WA.

These include domestic gas plants at Varanus Island, Devils Creek and Macedon and gas, condensate and oilfield offshore projects John Brookes and Reindeer fields.

Santos is the second biggest producer of domestic gas in WA and has been operating since the early 1980s.

The assets could sell for hundreds of millions of dollars, but they are declining assets with abandonment liabilities, and with liabilities included they assets would likely be offloaded for a nominal sum.

A possible deal would be part of a move by Carlyle to gain a presence in the Australian energy exploration market.

It also come as speculation mounts that Santos is preparing to relaunch its sale process for its stake in the Dorado oil and gas project off the coast of WA.

Last year, Santos had Goldman Sachs assessing suitable offers for the interest in the project that it jointly owns with Carnarvon Energy.

A 10 per cent stake in Dorado is Canarvon’s main asset and it is also believed to be placing itself up for sale through investment bank JPMorgan.

CPC has already bought 10 per cent of Dorado from Carnarvon.

Santos has an 80 per cent interest in Dorado and the thinking has been that it remains keen to reduce that exposure to about 60 per cent.